The Dow Jones (US30) added 0.80% on Friday (for the week -0.95%). The S&P 500 Index (US500) was up 1.26% (for the week -1.06%). The Nasdaq Technology Index (US100) was up 1.67% (for the week -1.42%). ISM data showed that US manufacturing orders rose more than expected in December, raising hopes that the sector may be on the road to recovery. However, factories expressed concern about the impact of tariffs and increased purchases to reduce the cost of more expensive inputs in the near term.

Goldman Sachs outlined seven key macroeconomic estimates for 2025, predicting that the year will be characterized by easing financial conditions, further rate cuts, and geopolitical uncertainty. From the main one:

• The bank predicts strong global real GDP growth of 2.7% annualized in 2025, driven by rising real disposable income and easing financial conditions.
• Goldman expects US GDP growth to exceed consensus at 2.4% in 2025, citing solid income growth and easing financial policy. Core PCE inflation is estimated to slow to 2.4% by December 2025, reflecting a further cooling of inflation.
• Goldman Sachs expects the Fed to conduct three rate cuts in 2025, with the first 25 bps rate cut in March, followed by additional cuts in June and September. This would result in a final rate of 3.5-3.75%. The Bank also expects the Fed to begin winding down its balance sheet in January and complete it by the second quarter of 2025.
• The European Central Bank is expected to continue its sequential 25 bps rate cuts, bringing the rate to 1.75% by July 2025. However, Goldman notes the potential downside risks to rate cuts, warning that faster and deeper cuts may be needed if growth and inflation weaken further.
• Goldman Sachs estimates that real GDP growth in China will slow to 4.5% in 2025 as policy easing measures will not fully offset weak domestic consumption and the impact of higher US tariffs.
• Goldman advises investors to monitor US policy changes and geopolitical developments closely. The report notes risks related to the Middle East situation, the war between Russia and Ukraine, and US-China relations.

Equity markets in Europe were mostly down on Friday. The German DAX (DE40) fell by 0.59% (for the week +0.29%), the French CAC 40 (FR40) closed down 1.51% (for the week -0.10%), the Spanish IBEX 35 (ES35) lost 0.22% (for the week +1.74%), the British FTSE 100 (UK100) closed negative 0.44% (for the week -1.07%). European indices are now under pressure as investors continue to assess the impact of more expensive energy prices and potential tariffs from the US. The cessation of natural gas supplies from Russia via Ukraine risks a new spike in electricity prices in Germany and other countries dependent on cheap natural gas. In addition to lowering the profits of major German producers, rising electricity costs also have the potential to reignite inflation in the Eurozone, limiting the ECB’s ability to cut rates.

WTI crude oil prices rose by 1.1% to reach $74 per barrel on Friday, helped by cold weather in Europe and the US and optimism over China’s stimulus measures. That rally drove prices to a two-month high and contributed to a weekly gain of nearly 5%. Concerns about the fragility of the Chinese economy have heightened expectations of new policy measures to stimulate growth in the world’s largest oil importer. These hopes offset last week’s bearish demand outlook.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) rose by 1.75%, China’s FTSE China A50 (CHA50) declined 4.12%, Hong Kong’s Hang Seng (HK50) fell by 1.61%, and Australia’s ASX 200 (AU200) was positive 0.60%.

The Australian dollar held steady above $0.62 on Friday, supported by higher oil and gold prices, given Australia’s role as a major commodity exporter. The currency also received support from an improving economic outlook in China, Australia’s largest trading partner, after Beijing promised “more active” macroeconomic policies and lower interest rates this year. However, the Australian dollar remains near two-year lows, pressured by the continued strength of the US dollar.

Vietnam’s annual inflation rate rose to 2.94% in December 2024, accelerating from 2.77% in the previous month. This is the highest inflation rate since August, as housing and construction materials prices rose. The annualized core inflation rate, which excludes volatile items, rose to a ten-month high of 2.85%.

S&P 500 (US500) 5,942.47 +73.92 (+1.26%)

Dow Jones (US30) 42,732.13 +339.86 (+0.80%)

DAX (DE40) 19,906.08 −118.58 (−0.59%)

FTSE 100 (UK100) 8,223.98 −36.11 (−0.44%)

USD Index 108.92 −0.47 (−0.43%)

News feed for: 2025.01.06

• Australia Services PMI (m/m) at 00:00 (GMT+2);
• Japan Services PMI (m/m) at 02:30 (GMT+2);
• China Caixin Services PMI (m/m) at 03:45 (GMT+2);
• Switzerland Retail Sales (m/m) at 08:30 (GMT+2);
• German Services PMI (m/m) at 10:55 (GMT+2);
• Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• UK Services PMI (m/m) at 11:30 (GMT+2);
• German Consumer Price Index (m/m) at 15:00 (GMT+2);
• US Services PMI (m/m) at 16:45 (GMT+2);
• US Factory Orders (m/m) at 17:00 (GMT+2).

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